Startup liquidity used to follow a predictable path. Raise capital, grow, and aim for an IPO or acquisition years down the road. But today’s market looks different. Exits are slower, private rounds stretch longer, and founders and early employees need liquidity long before an official exit, a shift that’s now fueling conversations about how VCs are evolving as investment bankers.
In this landscape, VCs are stepping into roles once held by investment bankers. They’re structuring secondary deals, coordinating tender offers, and creating new pathways for shareholders to access liquidity. These moves are reshaping the entire startup ecosystem.
This shift is fueling the question that’s now echoing across the industry: Are VCs as investment bankers the new normal in venture-backed markets?
Why VCs Now Behave More Like Investment Bankers
VCs started flipping roles because the exit landscape changed fast after 2021. Public markets cooled, IPO windows tightened and deal timelines stretched. Hence, GPs increasingly push venture capital liquidity strategies the way banks used to, by structuring, pricing, matching buyers and running repeatable VC dealmaking processes.
Fund managers face pressure from LPs who want cash back sooner, which forces GPs to find alternative private market exits: GP-led continuations, tender offers, direct secondaries and structured deals designed around investor liquidity needs. McKinsey found that “GP-led deals, including continuation vehicles, totaled $52 billion, the third year in a row where volume exceeded $50 billion.” That trend shows VCs actively creating exit pathways, not just waiting for markets to cooperate.
These moves put VCs squarely in “VCs as investment bankers” territory. They no longer only pick deals and hold; they underwrite outcomes and design liquidity programs to return capital.
The IPO boom of 2021 evaporated, and funds that expected quick paper-to-cash cycles now manage multi-year holdouts. That shift makes liquidity engineering a core product for top GPs.
How VC-Led Secondaries are Reshaping Startup Liquidity
The fastest-growing corner of private markets is VC-led secondaries. With companies staying private longer than ever, these deals let funds generate liquidity before traditional exits like IPOs or M&A materialize.
They’re now a key tool for managing venture capital liquidity, meeting investor liquidity needs, and keeping portfolios active in a stretched exit landscape.
GPs use secondaries strategically. Continuation vehicles allow a fund roll top-performing assets into a fresh structure with updated terms. Tender offers allow multiple early shareholders to sell in an organized way.
Direct secondaries connect investors and buyers efficiently, often through SPV platforms, enabling smooth, transparent execution.
Since 2021, exit timelines have stretched, IPO windows have narrowed, and LPs expect quicker distributions. Structured secondaries have moved from niche solutions to mainstream tools, creating predictable liquidity while keeping founders and employees aligned.
Syndicate leads supported by SPV (Special Purpose Vehicle) platforms now make it easier to execute these deals efficiently, scaling access to a broader investor base.
Benefits for Investors
- Optional liquidity on demand: LPs and early holders can sell stakes via LP-led secondaries or participate in GP-led continuation vehicles without waiting for a sale.
- Portfolio rebalancing: Investors free capital for new allocations and reduce concentration risk in mature private positions.
- Access to later-stage private deals: Secondary buyers can buy into more mature companies with clearer unit economics and shorter paths to a monetizable outcome.
- Value-add from operating VCs: When VCs run secondaries, they offer dealcraft, connections and governance continuity. These are benefits that banks rarely provide in private venture stakes.
Ready to run a GP-led continuation or a clean LP secondary? Talk to our expert to explore SPV, structuring, and regulatory-ready execution.
Liquidity Events that Make VCs Look Like Investment Bankers
The toolkit VCs now use resembles investment banking far more than classic venture playbooks. This includes three major categories of liquidity events:
Tender Offers
VCs coordinate structured tender offers to give founders, employees, and early angels an organized path to sell shares. These processes require pricing models, buyer matching, deal-room management, and compliance oversight, all functions historically handled by banks.
Continuation Vehicles
GP-led continuation vehicles have become increasingly popular. They allow VCs to continue backing winners while returning capital to LPs. This trend sits at the heart of the deal structuring VC movement and reflects the same mechanics used in PE continuation funds.
Structured Liquidity Deals
Structured deals, such as revenue-based payouts, guaranteed minimum returns, or preferred liquidity stacks, are now standard tools for funds trying to balance portfolio performance and LP expectations. These are part of modern structured liquidity frameworks that mirror investment banking engineering.
Together, these liquidity events form a new category of venture behavior. VCs are no longer just capital allocators. They are transaction designers, liquidity engineers, and strategic intermediaries building bank-like processes inside their funds.
How VC-Controlled Liquidity Impacts Founders and Employees
While this evolution brings benefits, it also reshapes the experience for founders and employees. The rise of VC-controlled liquidity influences founder liquidity, employee secondaries, cap table changes, and the constraints placed on early shareholder exits.
For founders, structured liquidity gives a safety valve. Instead of waiting seven to 12 years for a major exit, they can secure partial liquidity earlier, reduce personal risk, and continue operating with focus. Yet it also introduces new dynamics: VCs can now influence when and how founders access liquidity, and the terms often reflect fund-level needs as much as company-level realities.
Employees benefit from earlier and more predictable secondary opportunities, especially in ecosystems where equity compensation plays a central role. VC-organized liquidity windows allow teams to participate in upside without leaving the company or waiting for an IPO that may take years longer than expected.
On the flipside, these deals can introduce tighter control. Caps on who can sell, lock-ups, or VC-defined pricing structures may limit flexibility. As VCs take on a more investment-bank-style role, founders and employees must understand the terms thoroughly before participating in any liquidity event.
Final Thoughts
VCs now combine funding, execution and exit engineering—the very activities investment banks once owned. That shift creates new options for LPs, accelerates liquidity for founders and employees, and concentrates significant negotiation power in GPs.
Smart founders and LPs treat VCs as partners in liquidity design, negotiating valuation mechanics, insisting on independent pricing, and using structured liquidity to align incentives, not just cash out. For VCs and syndicate leads, the mandate is clear: run clean, transparent processes and build market confidence in your pricing.
Want to structure a compliant, fast SPV or run a GP-led secondary? Book a call with us or get in touch with us at info@auptimate.com, and one of our experts will be more than happy to help.
